We’re big consumers of investment research here at FTAV Towers, and sometimes write up the more interesting ones. But occasionally some of the chunkier ones fall between the cracks.
At the end of January, Goldman Sachs published a big sprawling 95 page (virtual) brick titled The Ecosystem of Electric Vehicles, looking at the entire value chain of companies in the space, from car manufacturers to component makers and infrastructure providers.
The central bit is Goldman’s forecast that global electric vehicle adoption will double to 16 per cent by 2025, 33 per cent by 2030, and cross the 50 per cent threshold soon after 2035.
If this comes to pass it will naturally have a major impact on the entire car industry and its suppliers.
We forecast that operating profits in the global automobile industry will rise from US$315 bn in 2020 (GSe; operating margin: 8%) to US$418 bn (9%) in 2030. Within this, we expect the EV-related profit pool to grow substantially, from US$2 bn to US$133 bn. Although we expect the profit pool for EV themselves to increase from US$1 bn to US$110 bn, traditional automakers will inevitably see a decline in profits from gasoline-engine vehicles. Competition is likely to be tough, but we see considerable growth potential for pure EV makers that can prevail. We expect the profit pool for EV-related components to increase from US$1 bn to US$23 bn over the decade, and see considerable earnings growth potential for manufacturers that can create new value in EV batteries, inverters, and motors.
Here is the report in its full glory (though we’ve taken out the contact details of the individual analysts who contributed to the report). Enjoy.